SINGAPORE: In his speech on the national Budget in Parliament on Wednesday (Feb 26), Workers’ Party MP Jamus Lim (Sengkang GRC) called for higher wages in Singapore, arguing that salaries have fallen behind increases in inflation and productivity.
Assoc Prof Lim argued that the Government could do more to expedite wage adjustment, such as instituting a statutory minimum wage, equalizing the employer share of CPF, and ensuring that guidelines from the National Wages Council are more widely adopted.
“Restoring the real purchasing power of wages is a surefire way to help working Singaporeans cope with sky-high costs of living,” he added.
He began his speech by acknowledging that inflation has decreased substantially over the past year, from 3.7 per cent at the start of 2024 to 1.6 per cent at the end, beating even the Monetary Authority of Singapore’s unofficial target of going under 2 percent.
The Sengkang MP pointed out that, though the speed of price increases has slowed, prices have remained high.
“We need not go again into comparisons of how much kopi-o or mee soto or biryani now command, compared to a few years ago. But suffice it to say that, especially for those reliant on fixed incomes, the cost of living has become ever-harder to bear.”
Additionally, while wages went up in 2024, as Prime Minister Lawrence Wong pointed out in last week’s Budget statement, over the past five years, annual real basic wages have lagged. In the 2010s they rose between 3 and 4 per cent, falling to 2.3 per cent in 2020, 0.9 per cent in 2021, negative 1 per cent in 2022, and 0.2 per cent in 2023
Assoc Prof Lim pointed out that this has happened while labor productivity increased, especially in 2021 and 2022, and has stayed at a higher level in comparison to the pre-Covid period. Additionally, except for 15 to 24 year olds, employment rates have also consistently improved.
“In other words, it was not for the want of productivity improvements or a soft labor market that wages have been suppressed,” he said.
Once corrected for inflation, salary increase over the last five years is much lower, Assoc Prof Lim noted, quoting the Ministry of Manpower, which said that real wages grew by only 0.7 per cent between 2019 and 2024.
“And as virtually every worker will attest, this high gross wage quickly dissipates once standard deductions are made. After subtracting CPF contributions and taxes, disposable incomes have to be made to stretch further and further.” /TISG